With finances bouncing back, Mayo plans to resume capital projects in Rochester

Mayo Clinic says it is resuming work on capital investment projects worth hundreds of millions of dollars in the Rochester area, after pausing the majority of new projects for nearly six months due to the pandemic.

Jeff Bolton, Mayo’s chief administrative officer, confirmed the news in a report last week to the DMC Corporation board. More than 100 projects in the Rochester area are set to be re-activated, Bolton says, with a combined budget over $230 million. 

While Bolton said a Clinic team is working on building a “smart hospital” to treat patients virtually as the pandemic accelerates the shift to telemedicine, he added that Mayo still intends to update and expand its physical presence in Rochester.

“While we see significant growth in our virtual practice, people with serious or complex medical conditions will continue to need to come to Mayo Clinic for direct care,” said Bolton. “We need to ensure we have the latest facilities and technology to attract and treat these patients, and we plan to make significant investments in upgrading and expanding facilities in the coming decades.” 

Over half of the $230 million price tag is earmarked for two projects in the Discovery Square sub-district. Most notably, the Clinic plans to begin construction on the Anna-Maria and Stephen Kellen Building, a four-story, 64,000 square-foot center for cancer research with a price tag of $120 million. (In 2019, the Kellen Foundation donated $32 million to the Clinic to kick-start the building’s construction.)

Originally, plans called for a groundbreaking in 2020 and a grand opening in 2022 — now, the Clinic is shooting for a groundbreaking next spring and a grand opening date in late 2023. Bolton said Mayo will also break ground on a $40 million parking ramp in conjunction with the Kellen building, as Discovery Square continues to grow.

Thursday’s report marked another step in Mayo Clinic’s financial recovery, after indefinitely pausing progress on most non-essential construction projects in April. This month, the Clinic released their financial statements for the third quarter, showing a return to form after reporting major drop-offs in revenue and income earlier in the year. 

Third quarter net operating income was reported at $288 million, the largest number in 2020 by far and a 5.8 percent increase over the reports from the third quarter of 2019. Total net operating income for the first nine months of 2020, however, still lags behind last year’s reports by over 50 percent.

Total revenue for 2020 sits just below the $10 billion threshold, down 1.5 percent year-to-year.

Isaac Jahns is a Rochester native and a 2019 graduate of the Missouri School of Journalism. He reports on politics, business and music for Med City Beat.